Frequently Asked Question (FAQ) | Paula Kleinman, Esq. & Jonathan Beck, Esq.

Frequently Asked Questions

1. Will I have to go to court?
2. Will I lose my property?
3. Will I lose my car?
4. Will I lose my house?
5. Will this affect my current employment?
6. Will this affect my future employment?
7. Will bankruptcy affect my credit?
8. Will I be able to buy a house after filing bankruptcy?
9. Will filing bankruptcy affect my spouses credit?
10. What is a creditors meeting?
11. Who is the trustee and what does he do?
12. Can a creditor object to my bankruptcy?
13. What is a Chapter 7 Bankruptcy
14. What is a Chapter 13 Bankruptcy
15. What is Credit Counseling
16. What is Debtor Education
17. What is the Means Test

Will I have to go to court?

The vast majority of bankruptcy cases do not require your appearance in the Bankruptcy Court. You will be required to appear at a creditors meeting. This is not in a courtroom and it is not before a judge. See Creditors Meeting below.

Will I lose my property?

Filing bankruptcy does not mean that you will lose any property. Although a Chapter 7 bankruptcy is referred to as a "liquidation", the majority of the cases are in fact classified as "no asset" cases. This is not because the debtor did not own any property. Either all the debtors property was encumbered by liens, or the property was considered exempt. This classification will be discussed in more detail during your consultation.

Will I lose my car?

If there is a loan on your vehicle you will generally be afforded an opportunity to keep that vehicle and keep making payments on it in a Chapter 7 case. If there is no loan on your vehicle you may or may not be able to retain the vehicle, depending on a number of factors that would be discussed in more detail during your consultation.

If you file a Chapter 13 you may be able to effectively refinance the vehicle loan and pay a reduced amount at a lower interest rate. There are a number of factors including when you purchased the vehicle and the value of the vehicle and other facts. This will be discussed in more detail during your consultation.

Will I lose my house?

A Chapter 7 will delay a foreclosure but it will not stop it. IF you qualify to file a Chapter 13 you may be able to take steps to both delay the foreclosure and save your home. A consultation would be required to determine if a Chapter 13 would be appropriate in your case.

Will this affect my current employment?

Bankruptcy will have no effect on most peoples current employment. Some jobs with require a credit and background check, and a bankruptcy could disqualify you from employment

Will this affect my future employment?

Bankruptcy will have no effect on most peoples future employment, however there are a small number of jobs that a bankruptcy could negatively effect. If you work in such a profession this will be discussed at your consultation

Will bankruptcy affect my credit?

Yes, it is reported on your credit. However, bankruptcy is a double edged sword. While bankrutpcy is considered black mark on your credit, it does serve to clear off bad debt, and that will improve our credit.

Will I be able to buy a house after filing bankruptcy?

You Usually can not get a home loan immediately after filing. You generally have to wait two years before you can qualify for FHA financing on a home.

Will filing bankruptcy affect my spouses credit?

The bankruptcy goes on the credit file of the filing individual. If you spouse does not file then the bankruptcy will not appear on their credit file.

What is a creditors meeting?

When the bankruptcy case is filed the court sets a date for a creditor's meeting, also known as a 341(a) meeting. This meeting is about a month after filing. You are required to attend the meeting. They usually only last a few minutes, and require you to answer some questions, most of which you heard prior to the meeting. Creditors have the opportunity to ask you about your assets. Most creditors do not attend. The Trustee will ask a number of questions, possbily some specific questions about your income or assets. We will attend the creditor's meeting with you, and will be available to answer any questions or concerns you may have.

Who is the trustee and what does he do?

The trustee is a neutral party to the bankruptcy, he does not work for the Court or for the creditors, nor does he work for yo the debtor. His job is to administer the case, gather any assets and liquidate them for the benefit of the creditors.

Can a creditor object to my bankruptcy?

In some cases a creditor may formally object to the bankruptcy. Usually it is in a situation where debt was incurred close to the time of filing, or incurred under fraudulent circumstances.

What is a Chapter 7 Bankruptcy?

A Chapter 7 is also called a "liquidation", even though there is almost never an actual liquidation of property. This type of bankruptcy discharges certain unsecured debts. A Chapter 7 may not have much effect on secured debt, such as home or automobile loans. Although a Chapter 7 will discharge personal liability for the debt, it will only delay, not stop, a foreclosure or repossession. Those types of debts can be included in a Chapter 7, but are usually more effectively dealt with in a Chapter 13 bankruptcy

What is a Chapter 13 Bankruptcy?

A Chapter 13 Bankruptcy is also called a "reorganization". When you file for bankruptcy under Chapter 13 you are able to effectively reorganize and pay your debts, often in a reduced amount and at a lower interest rate. Unlike private credit counseling, the creditors are required to accept the terms of a Chapter 13 Plan of reorganization. A Chapter 13 has traditionally been used to prevent a foreclosure or repossession. Another powerful aspect of the Chapter 13 bankruptcy is the ability for the debtor to "strip liens". Lien stripping is an court order removing a junior line that is wholly unsecured (has no equity). Since the reforms of 2005 more high income earners have been stopped from filing a Chapter 7 and have used the Chapter 13 for debt relief.

What is Credit Counseling?

Prior to filing a bankruptcy each debtor must complete a credit counseling session with an approved provider. Your attorney can recommend an approved provider, or you can find one on the internet. Most debtors complete the session on the internet or by phone, the cost is under $50.00. The best deal is to purchase a counseling session and a post filing education course (also mandatory) as a package. For more informationclick here to go to the United States Trustee's website

What is Debtor Education?

A Chapter 13 Bankruptcy is also called a "reorganization". When you file for bankruptcy under Chapter 13 you ar able to effectively reorganize and pay your debts, often in a reduced amount and at a lower interest rate. Unlike private credit counseling, the creditors are required to accept the terms of a Chapter 13 Plan of reorganization

What is the Means Test?

The Means Test was a mathematical test which Congress mandated as part of the reforms of 2005. This test establishes eligibility for Chapter 7 based upon income earned in the six months prior to the filing of the bankruptcy. The basic test sets the income limit at the median income of the district in which the debtor files. There are a number of factors that can affect the outcome of the formula so it is best to consult with an attorney to determine your eligibility under the Means Test.